Will Taiwan Change the Way it Defends it’s ADIZ ?
Taiwan’s ADIZ is breached yet again but this time by more than two dozen PLAAF fighter planes , forcing it to shift the methods it takes to defend itself.
- Jaime Ocon, Taiwan Center for Security Studies
Yesterday (April 12) Taiwan’s ADIZ was not only breached again but was met this time with a reported 25 PLAAF airpieces entering the zone. The report can be found here. Out of the almost two dozen fighter planes, a number of aircraft continued to make a half circle near the coast of southern Taiwan, until finally heading back to Mainland China. For many countries around the world, the sounds from a squadron of Chinese PLAAF would undoubtedly cause chaos and commotion but for Taiwan however this has become the norm. Nevertheless, this stunt of force was the largest in terms of the number of planes deployed this year and both the US and Taiwan recognize the apparent threat on the horizon.
The move comes after Taiwan and the United States signed a memorandum of understanding on March 25 to establish a Coast Guard Working Group (CGWG). Experts believe that the MoU was passed as part of a response to China's Coast Guard Law, which recently allowed the country's coast guard ships to go weapons free against foreign ships in China’s claimed territorial waters under certain conditions. Beijing continues to poke into Taiwanese territory to demonstrate its willingness to reunite Taiwan by force if necessary , as part of its ultimate goal of unification before 2049.
In a paper titled , The Longer Telegram: Toward A New American China Strategy, written by an anonymous source from the Scowcroft Center for Strategy and Security, it is clear that reunification of Taiwan is not only one of several goals laid for China in the coming future but possibly the #1 priority. Make no mistake, Taiwan is well aware of the coming storm on the horizon and while it is no longer a question of “what if”, the more important question is how and when. A few days after a previous incursion (March 26) of 20 planes into Taiwan’s ADIZ, a senior official in Taiwan’s Ministry of National Defence stated that it would no longer scramble planes, instead opting for missile defense systems to intercept any targets. Soon after Taiwan’s Air Force announced plans to upgrade its Patriot Advanced Capability 3 (PAC-3) Missile Segment Enhancement (MSE) missiles, aiming for all systems to deploy in late 2025.
The move makes complete sense when put into perspective that Taiwan had spent almost $900 million as of October 2020 on scrambling fighters against Chinese PLAAF. Taiwan’s air power capability can operate roughly 290 combat aircraft compared to China’s 1,700. The numbers don't favor the possibility of the island maintaining air superiority. Thus, it was imperative that Taiwan continued to bolster up its land-to-air missile defense systems to deter the sorties of fighter planes China possesses. Under the Trump administration , Taiwan was able to make significant improvements in its defence capabilities , a promise that the United States has kept since the signing of the Taiwan Relations Act to provide a means for the island to defend itself. Newly elected President Biden has continued Trump’s generosity in the sense of the magnitude of purchases Taiwan is able to complete, but will that be the case in the future ?
This raises the question that ultimately will be the deciding factor of cross-strait relations; Will the United States defend Taiwan directly if a Chinese invasion were to transpire ? The answer is not clear but if the United States were not to respond , either directly or indirectly, its security credibility in Asia would be gone as well as its ability to provide its version of security in the region. More so, with Beijing's new found success , were it to successfully take the island , would excel China’s case as a new security hyper-power and more than challenge the U.S militarily.
President Biden is thus left with a century defining task of manifesting an Asian Policy that can address , or somewhat establish, the policy towards Taiwan’s defence. Not much has differed from that of former President Trump’s attitude towards China , but that's where the rhetoric becomes key in analyzing the U.S’s next move. It has an attitude but not a strategy, and as March has come and gone the United States has yet to release its policy for dealing with a continent that will no doubt dominate the rest of the world in terms of economy and security.
Disregarded Global Climate Crisis and the Quad
-Harun Talha Ayanoglu, Taiwan Center for Security Studies
The international community has been carefully watching the developments out of the recent Quad summit. Its agenda is often regarded as countering China’s growing influence in the Indo-Pacific region. Thus, as could be expected, heated discussions concentrated on the US-China following the Quad meeting. Similar to other global summits, there were other shared challenges on the table, such as global climate change, the coronavirus pandemic, critical technologies, counterterrorism, humanitarian assistance, and maritime domains. What stood out was the official jargon in which the issue on climate was phrased, lending much to be inferred and little of substance.
“We are united in recognizing that climate change is a global priority and will work to strengthen the climate actions of all nations, including to keep a Paris-aligned temperature limit within reach. We look forward to a successful COP 26 in Glasgow.” underlined in Quad Leaders’ Joint Statement. Nevertheless, climate change and concerns of global water shortages were left in dust, overshadowed by the concerns on China, whereas various parts of the world suffer from drought and other hydropolitics.
Global climate change is often associated with water shortages; this is particularly significant when water shortage coincides with a growing population. Almost no region in the world is immune to water shortage, and as the UN projections demonstrate, by 2040, global water demand is projected to increase by more than 50%, and by 2050 it is estimated that 5.5 billion people could suffer from water scarcity.
Water Crisis in Taiwan
Despite not being a formal member or a partner of the Quad, Taiwan’s climate-related water crisis is one of the most daunting cases in the region and as a sub-tropical country. As climate change inherently knows no borders, country-specific issues appear to be a symptom of future climate crises. In other words, climate change, as a structural threat, indirectly affects global peace and stability; hence requiring global attention.
“Taiwan faces the most severe water crisis in 56 years,” said President Tsai, while she urged people to conserve water. By the beginning of March 2021, water shortages and drought have hit central and southern Taiwan. Waters receded remarkably in reservoirs and lakes in central Taiwan due to lack of typhoons (on average 3.6 typhoons each year) and seasonal precipitation over the last year. According to officials, four of six reservoirs in Central Taiwan are at lower than 15% of their capacities, and the rest are below 20%; and in case of five more meters fall in the water level hydropower generation will be in danger.
Besides human security, drought also affects semiconductor industries, which Taiwan relies upon economically. Global demand for microchips and semiconductors has already skyrocketed due to pandemics, and the recent water shortage increased the concern over the global supply chain, as the production of semiconductors requires a large amount of water. For example, to meet its operational needs, Taiwan Semiconductor Manufacturing Company (TSMC) must supply 156,000 tons of water daily. Although companies have decreased their water demand by using recycled water, still, it is needed to order tanker trucks to maintain their operations.
What to expect?
World Water Day coincided with the Quad meetings this year on March 22. Although the formation of the Quad Climate Working Group, which is entrusted with the implementation of the Paris Agreement and global cooperation on enhancing adaptation, resilience, and capacity building, is a promising development, the intensity of geopolitics shadowed the severity of the climate change. Therefore, is not prudent to limit regional and global security within the confines of a hard-security perspective or framework. The aforementioned UN projections draw a highly pessimistic future for not only developing but also developed countries, unless global cooperation on climate change is ensured.
The Quad has the potential to serve as an essential forum discussing and hopefully addressing other critical issues, within the scope of cooperation with its like-minded members, as well as competitors. As climate is not an issue that nations compete over, especially in times of anthropocene. Although it may be premature, the Quad may yet initiate regional cooperation with China to cope with the climate crisis, as have been inferred from the US-China High Level Talks in Alaska last week. Since all humankind, regardless of the Quad or China, will be victims of any such crisis.
The View from Taiwan, Intel’s Expansion into the Semiconductor Industry
Intel announced last week that it would expand its business into chip fabrication, with plans to open up foundries on-shore in the continental United States.
- Aswini Kumar, Taiwan Center for Security Studies
Intel’s Power Move
Intel’s chief executive officer, Pat Gelsinger, astonished the world’s supply chain market last week by saying the company would go into the foundry business. It will also set up an independent business unit, named Intel Foundry Services. Gelsinger said the company will continue expanding partnerships with multiple contract chipmaking providers, including TSMC, Samsung, United Microelectronics and GlobalFoundries. Gelsinger’s strategy of co-opetition could be analyzed in a duo-pronged approach, either mutually beneficial or an attempt to gain the upper hand in the chip-making business. Since 2016, TSMC has been the sole iPhone processor maker and since last year, began to produce Apple’s in-house designed CPUs for MacBook computers, while Intel was behind in market. TSMC also often shares orders with Samsung to yield high-end mobile processors for Qualcomm. Moving forward, TSMC will face severe pressure from this new strategy of Intel, which tried to start up a plant in the same place as TSMC in the state of Arizona.
TSMC’s shares have dropped around 3% since Gelsinger’s announcement. Intel’s new strategy to get back into semiconductor leadership has been favoured by investors. But Taiwanese chip champion TSMC still seems confident in their ability to endure this challenge. The imminent impact on TSMC is dubious: Recent chip scarcity implies it has more business to deal with than it can. For the moment, Intel will still need to outsource the making of its most advanced chips to the likes of TSMC. Mr. Gelsinger’s IDM 2.0 vision will imply to Asian rivals like TSMC and South Korea’s Samsung Electronics that other manufacturers are seeking to join in producing cutting-edge chip-making technologies.
This year, Intel will spend huge amounts of capital to catch up, raising by more than 30% to between $19 billion and $20 billion while building two plants in Arizona for $20 billion. It is anticipating demand for advanced chips will expand the costs and justify the cash expenses. Intel’s previous attempt at entering the foundry business, in 2013-14, went nowhere. Last July, Intel reneged from unveiling its most advanced chip processing technology of 7nm to 2023. Indeed speeding up the race for semiconductor production leadership to its Asian rivals TSMC and Samsung.
TSMC as it Stands
On the other side, TSMC isn’t resting still. The tech giant has increased this year’s capital-outlay by more than 40% to between $25 billion and $28 billion. According to Trendforce, Taiwan and South Korea, neighbours of China, alone have more than 80% of the foundry market. TSMC alone has more than half. However, Asian foundries are alleviating U.S. anxieties. Last year, TSMC announced it will spend $12 billion to build a plant in Arizona. Samsung is exploring tactics to spend about $17 billion building U.S. plants.
Even though Intel employed a great strategy of more investment and entering the foundry again to get more customers to share the cost, it would be difficult to conquer major customers and overthrow the crown from TSMC. TSMC has had years of serving a diverse customer pool including Apple, Nvidia and appreciates a better cost structure. It is also unladen by the inherent conflict of interest Intel endures, as a company that has been upholding Integrated Chip Design For Manufacturing (DFM), and sells its own fabricated ICs. Which actually creates less credibility and reliability as it relates to copyright. As some of its desired customers like Amazon, Cisco, Ericsson, Google, IBM and Microsoft are also developing their own chips. Intel says it will keep the foundry independent, but customers like AMD and Apple will likely hesitate to give Intel their contracts.
The Geopolitics of Chips
This becomes a significant issue as backed by geopolitics in the international arena. As the U.S. has been striving to possess a secure domestic semiconductor supply chain, the new plan of Intel fits well in its strategic vision. U.S. Secretary of Commerce Gina M. Raimondo acclaimed Intel’s investment plan in Arizona, saying it will aid “to preserve U.S. technology innovation and leadership, strengthen U.S. economic and national security.” On employing timely strategy, Intel can await substantial government backing, since the new US administration has emphasized semiconductor manufacturing in its national security.
These announcements are intended to run counter to an Asian-dominated supply chain, or in some ways integrate them with US-domestic supply chains. As China seeks to move in on the chip manufacturing industry and is investing heavily in the tech space, Washington and its allies will indeed revisit its strategies to ensure their strategic advantage. At which point, industry-leaders such as Taiwan may be forced to adapt and grow at an accelerated pace due to the changing dynamics ahead.
Besides this announcement, TSMC has been at its high critical point, as current powers US and China have been striving to increase its budget allocation particularly to indigenous semiconductor chip manufacturing. On March 5th this year, China released its 14th Five Year Plan which exclusively focuses on more funding for chip manufacturing. Striving to reduce its reliance on external supply chains, especially on TSMC. As the trade war turned into a severe tech war between US-China, these initiatives can be a hurdle for TSMC. Thus, Intel back with an ambitious strategy could be a challenging rival, yet TSMC will likely for the foreseeable future, still stay on the throne of the world’s semiconductor business.